Clearstream – D7
In July 2021, Global Custodian reported that Clearstream was working alongside distributed ledger technology (DLT) solutions provider Digital Asset to replace its legacy technology systems. The move was ambitious, eye-catching, but – most importantly – at a stage of development where we at Global Custodian could recognise its progress.
In a market often bogged down by legacy constraints, the project plans for a fully digital, cloud-backed post-trade platform, enabling end-to-end digital securities processing. By doing this, Clearstream wishes to simplify the process for market participants looking to adopt.
Once the new end-to-end system is in place, participants will be able to choose whether they wish to remain on the existing set-up or to upgrade and embrace the new technology – depending on the individual appetite of the client.
Speaking to Global Custodian in May last year, Jens Hachmeister said that building a post-trade platform is key to the Clearstream’s objectives. “Digitisation and digital securities are at the very top of the Clearstream agenda, and we have started to make that concrete.”
The ultimate aim of the project is to improve the cost efficiency of the markets, making them faster and more resilient. We look forward to seeing the finalised product in its full glory.
Euroclear – CBCD tests
Euroclear announced in a post on its website this year: ‘CBDCs – the time has come’ and the ICSD has been busy trying to bring its claim to life through experiments and partnerships.
In July, Euroclear worked with a consortium of banks to conduct a successful test with the Banque de France using central bank digital currency (CBDC) to settle the issuance of a French government bond.
The experiment consisted of a simulation on a permissioned blockchain of government bonds’ (OAT) issuance of by Agence France Trésor, followed by several secondary market operations performed on these bonds. Cash settlements were simulated by CBDC issued on the blockchain.
The consortium was led by Euroclear and included custody banks such as BNP Securities Services, Credit Agricole, HSBC and Societe Generale, which all executed different test scenarios.
Just a week later it worked with FinTech firm LiquidShare to complete an experiment in the use of CBDCs for interbank settlement purposes.
Then, in October, a consortium of institutions led by Euroclear again successfully experimented with CBDCs for settling French treasury bonds on a test blockchain.
The objective of the experiment was to assess if a wide range of operations and functionalities can be run on a blockchain platform and identify, from a user point of view, the added value of blockchain technology.
While we’re not recognising Euroclear for these projects individually, the ICSD’s continued efforts and examples of industry collaboration have earnt it a spot on this year’s shortlist.
DTCC – Project Ion
Project Ion has been developed by the Depository Trust & Clearing Corporation (DTCC) as an alternative settlement platform, utilising DLT to support T+1 and T+0 settlement.
Within the objectives of Project Ion is to provide an option for clearing and settlement, support new features and provide interoperability between the Project Ion platform and the classic settlement platforms at The Depository Trust Company (DTC).
Due to launch in the first quarter of 2022, the platform will serve as a parallel book and infrastructure for limited bilateral transactions on DLT, with DTCC’s existing systems continuing to remain the authoritative source of transactions.
The launch of the platform coincides with the switch to T+1 for US equities, representing a significant shift for the industry. Supporting the transition, DTCC said Project Ion will support bilateral deliver order transactions on launch, initiated by pilot participants through client nodes.
“The industry’s primary goal must be to create efficiencies without introducing additional risk to markets,” said Micele Hillery, general manager of Equity Cleaning and DTC Settlement Service at DTCC. “Client participation and feedback at every iterative step of this journey will be pivotal to the continued success of the platform.”
CLS – Convergence
In July, CLS revealed that it had completed the implementation of Convergence – a replatforming of its post-trade settlement technology infrastructure.
The roll-out marked the largest technology change initiative that CLS has undertaken since the launch of CLSSettlement in 2002. Through the new platform, CLS now has complete ownership of application development and change delivery, with in-house specialists managing ongoing platform support.
The CLSSettlement system has been migrated onto the Unified Services Platform (USP), where it has been optimised to provide enhanced FX settlement services for custodians, clearing banks and investment firms.
Implementation of Convergence forms part of a wider technology investment programme at the firm, aimed at advancing and optimising post-trade solutions – allowing more control of change delivery for its settlement solutions.
“The priority for us is that new technological solutions meaningfully drive efficiency while also meeting extraordinarily high standards of resilience,” said Tom Barkhuff, chief information officer at CLS at the time. “Through a multi-year technology investment programme, we have kept this focus and delivered upon our objective of implementing a best-in-class technology stack for the industry.”